EDITORIAL: Council imposes another rate hike consumers can't afford

By: The Gazette editorial

May 28, 2014Updated: May 28, 2014 at 11:56 am

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City Council should run Colorado Springs Utilities as a business, keeping rates low so the community can compete for and incubate employers. Council's rush to raise prices Tuesday makes little sense to those who live outside local government's comfort bubble.

A May 5 fire shut down the Martin Drake Power Plant's means of production. Insurance covers the facilities but not the product. Until the insured assets can be repaired, the plant can't generate electricity — the primary commodity it sells. Yet, the setback hasn't cost one employee a day's wage. All pain will roll downhill to City Council's constituents.

Without Drake, council must buy natural gas at a premium to generate electricity at a backup facility. To pay for this option, council voted 7-2 for a substantial rate hike. The decision follows council's imposition of a 2 percent increase in March. Wednesday's vote saddles residential customers with a 7.4 percent hit. Businesses get socked with increases up to 11.2 percent, costing a typical industrial customer $42,720 a year. They'll have less money for new employees or raises. The expense will ripple through the economy as families and businesses struggle to get by.

Imagine other businesses in the wake of crisis. A sausage factory cannot impose a massive price increase to pay uninsured costs associated with a fire or flood. Consumers wouldn't pay it. To stay in business, the company would cut expenses. Employers and managers might endure temporary wage cuts and furloughs. They might lay off nonessential employees. Most goods, services and commodities have values fixed by markets. Executives cannot merely mark up prices by fiat to pay for every crisis that comes along.

Families are no different. If a flash flood destroys carpeting and walls, the head of household must absorb deductibles and costs of uninsured damage. This may involve cancelling tuition payments and vacation plans, or renegotiating debt. She cannot pass off the expense by voting herself a raise.

Council members didn't ask for this fire, but neither did ratepayers. They hoped council would make tough decisions and absorb at least some of the costs of this fire without imposing high rates. Council could have demanded temporary wage reductions and furloughs among the utility's 1,800 employees. It could have outsourced services and temporarily halted all Utilities marketing.

Instead, seven council members wallowed in the comfort of monopoly status. They transferred all hardship to involuntary ratepayers who have no choice but to pay the bill.

"This is the cost of producing electricity," said Councilman Joel Miller, before voting to raise rates.

Only councilwoman Helen Collins and Council President Keith King wanted to think critically for the benefit of consumers. Collins explained what happens to a homeowner when a pipe breaks between the house and the Colorado Springs Utilities sewer line.

"You (the homeowner) have to pay for that," Collins said. "You have to come up with an alternative. You have to cut your budget."

She'd like city government to play by its own rules.

"I'm one for looking for a way to cut expenses," Collins said.

Collins represents southeast neighborhoods and said her constituents live "check to check" and "cannot afford another increase."

King wanted council to share a least a fraction of the pain.

"When we have an emergency, it's important to look at the operation in totality and see what we can do before we simply raise rates," King said.

Exactly, councilman. The community deserves better than this lackluster solution from elected public servants.